By Eadie Chen and Jason Subler
BEIJING, March 17 (Reuters) - China's central bank said on Saturday that it was raising interest rates for the third time in less than a year to put a lid on credit and investment and keep the world's fourth-largest economy on an even keel.
The People's Bank of China said that, effective Sunday, its benchmark one-year yuan lending and deposit rates would rise by 0.27 percentage point each. That brings the one-year deposit rate to 2.79 percent and the lending rate to 6.39 percent.
"The rate increase is conducive to the reasonable growth of credit and investment, to stabilising prices, to the stable operation of the financial system, to balancing growth and improving the structure of the economy, and to promoting the healthy but rapid development of the economy," the central bank said in a statement on its Web site (
www.pbc.gov.cn).
The move follows an increase of lending rates alone on April 27 of last year and a rise in both rates last Aug. 18. The central bank has also raised banks' required reserves five times since last June, to help soak up liquidity generated by the country's large balance-of-payments surplus.
Many economists had expected the central bank to take further tightening measures after a batch of strong economic data for February showed credit surging, factories expanding output rapidly, and exports growing 50 percent from a year earlier.
"In light of the data over the past few days, this isn't the slightest bit of a surprise," said Jim O'Neill, chief global economist at Goldman Sachs.
